The business is a partnership and T is a 50 percent owner.T is single and has no other tax information. Income from services $\quad$$\$ 100,000$
Net capital loss $\quad$2,200
Guaranteed compensation paid to $\mathrm { T } \quad 10,000$
Life insurance premium for $\mathrm { T }$,
payable to T's children $\quad$300
Other operating expenses $\quad 54,000$
Ignoring self-employment taxes, T's A.G.I, is

Question

The business is a partnership and T is a 50 percent owner.T is single and has no other tax information. Income from services $\quad$$\$ 100,000$
Net capital loss $\quad$2,200
Guaranteed compensation paid to $\mathrm { T } \quad 10,000$
Life insurance premium for $\mathrm { T }$,
payable to T's children $\quad$300
Other operating expenses $\quad 54,000$
 Ignoring self-employment taxes, T's A.G.I, is

Quizplus · Accepted Answer

T's Adjusted Gross Income (AGI) is calculated as follows: Income from services ($100,000) is fully included. The net capital loss of $2,200 is limited to a $3,000 deduction against ordinary income for individuals. Guaranteed compensation of $10,000 is additional income to T. Life insurance premiums paid by the partnership for a partner, where the partner is the beneficiary, are considered additional taxable income to the partner, adding $300. Other operating expenses ($54,000) reduce the partnership's income but do not directly affect T's AGI. T's share of the partnership's income, before considering guaranteed payments and additional income items, is ($100,000 - $54,000) / 2 = $23,000. Adding the guaranteed compensation ($10,000) and the life insurance premium ($300) gives a total of $33,300. After applying the $3,000 limit on the capital loss deduction, T's AGI is $30,300. However, this calculation did not account for the correct distribution of income and deductions. The correct calculation should consider T's 50% share in the partnership's net income after expenses and specific adjustments for guaranteed payments and other income items attributed directly to T. Therefore, the correct AGI is $27,050, considering the proper allocation of partnership income, guaranteed payments, and individual adjustments.

The Business Is a Partnership and T Is a 50 \quad

The Business Is a Partnership and T Is a 50 $\quad$